S-12 Regulatory Framework and Oversight 3

Question 1

Under SEC Rule 15c3-1 (the Net Capital Rule), broker-dealers must maintain minimum net capital to protect:

Accepted Answer

Customer assets and the firm's financial obligations

Answer

The firm's profits

Answer

Only proprietary trading positions

Answer

Only margin account balances

Question 2

Which report must broker-dealers file annually with the SEC and FINRA to demonstrate financial responsibility?

Accepted Answer

FOCUS Report (Financial and Operational Combined Uniform Single Report)

Answer

Form ADV

Answer

Form U4

Answer

Form BD

Question 3

Under the USA PATRIOT Act, broker-dealers must verify customer identity as part of their:

Accepted Answer

Customer Identification Program (CIP)

Answer

Suitability program

Answer

Margin agreement

Answer

Arbitration clause

Question 4

FINRA Rule 4370 requires broker-dealers to establish and maintain:

Accepted Answer

A business continuity plan (BCP)

Answer

A social media policy

Answer

A cryptocurrency trading policy

Answer

A succession plan for the CEO

Question 5

What is 'Regulation NMS' primarily designed to address?

Accepted Answer

National market system rules to promote fair and efficient equity markets

Answer

Margin lending standards

Answer

Mutual fund disclosure requirements

Answer

Options trading rules

Question 6

Under SEC Rule 10b-5, it is unlawful to:

Accepted Answer

Make any untrue statement of material fact or engage in any fraudulent scheme in connection with a security

Answer

Trade securities without a license

Answer

Recommend unsuitable investments to retail clients

Answer

Charge excessive commissions